In international business, a subsidiary refers to a legal person enterprise of the host country established in accordance with the law with all or part of the shares invested by the parent company.
The subsidiary is legally independent from the parent company and has an independent and complete company management organization system, so it has greater independence and certain flexibility in operation. The business activities of subsidiaries should also be indirectly controlled by the parent company and subject to the needs of the overall strategy and interests of the parent company.
Second, the status of legal persons is different:
Branches have no independent legal personality, but subsidiaries do. The contents of the industrial and commercial registration of enterprises in the Administration for Industry and Commerce are different, which is embodied in the capital contribution.
Article 14 of the Company Law stipulates: "A company may set up a branch, which does not have the qualification of an enterprise legal person, and its civil liability shall be borne by the company. A company may set up a subsidiary, which has the status of an enterprise legal person and independently bears civil liability according to law. "
relationship
The subsidiary is actually controlled by the parent company. The so-called actual control means that the parent company has the actual decision-making power over all major matters of the subsidiary, especially the composition of the board of directors of the subsidiary. The parent company may appoint multiple directors of the board of directors by exercising its power without the consent of others. Although some trust institutions own a large number of shares in the company, they do not participate in the actual control of the company's affairs, so they do not belong to the parent company.
Reference to the above content: Baidu Encyclopedia-Subsidiary